What is Asbestos Tax Relief and who qualifies for it?

Asbestos Tax Relief is part of the UK’s Land Remediation Relief (LRR) scheme, allowing UK-registered companies to claim 150% tax relief on qualifying costs related to asbestos removal from contaminated land or buildings. The relief is only available to companies subject to UK corporation tax and does not apply to individuals or partnerships. The company must not have been responsible for the original contamination.

What types of asbestos-related work are eligible for tax relief?

Eligible work includes the removal, remediation, or management of asbestos found in or on commercial land and buildings. This can involve asbestos surveys, air monitoring, contractor costs, validation reports, and associated project management. To qualify, the asbestos must have been present when the land or property was acquired from an unconnected third party.

What does the 150% tax relief actually mean in financial terms?

The 150% relief allows companies to deduct 150% of qualifying asbestos remediation costs from their taxable profits. For example, if a company spends £100,000 on qualifying asbestos work, it can deduct £150,000 from its taxable income. This can result in significant corporation tax savings or, in some cases, a cash tax credit if the company is loss-making.

Are there any restrictions or exclusions on making a claim?

Yes. The claimant must not have caused the contamination and must have purchased the land or building in a polluted state. Expenditure must be incurred after acquisition and must not be covered by any other subsidy or grant. Claims also must be made within specific time limits, typically within two years from the end of the relevant accounting period.

What additional costs related to asbestos remediation can be claimed?

In addition to direct remediation costs, businesses may claim associated costs such as environmental surveys, landfill tax, professional fees, project management expenses, and certain replacement materials used in redevelopment. These can increase the total value of the claim and should be well documented to meet HMRC requirements.

How is an asbestos tax relief claim submitted to HMRC?

Claims are made through the company’s corporation tax return. The claim must be supported with full documentation, including detailed invoices, breakdowns of costs, proof of contamination at acquisition, and validation reports. Working with asbestos specialists who understand HMRC’s evidence requirements is recommended to ensure compliance and maximise relief.

Can companies claim retrospectively for asbestos remediation?

Yes, retrospective claims can be made for up to three years, depending on the accounting periods in which the expenditure was incurred. This is useful for companies that may have completed asbestos remediation in previous years but were unaware they qualified for Land Remediation Relief.

What happens if a company misses the time limit for claiming Asbestos Tax Relief?

If a claim is not made within two years of the end of the relevant accounting period, the company risks losing the opportunity to benefit from the relief. Time limits are strictly enforced by HMRC. Maintaining clear records of all remediation costs and claim deadlines is essential to avoid missed savings.

Asbestos Tax Relief: Are You or Your Clients Missing Out?

Are you or your clients paying for asbestos work? If the answer is yes and this work is in buildings or on land, including contaminated or derelict land, then you could be eligible for sizeable tax relief. However, it is important to note that the scheme for asbestos removal tax relief is only available to UK-registered companies, not individuals or partnerships.

What is Asbestos Tax Relief? 1 Although tax relief for asbestos removal/remediation and asbestos contaminated land was introduced more than 16 years ago, businesses are still unsure as to how the government scheme benefits them. Relief is available for a range of contamination issues, not just asbestos.

As part of the government’s commitment to urban regeneration it introduced 150% tax relief for businesses, specifically UK companies subject to corporation tax, incurring expenditure on land remediation (This includes asbestos). The relief only applies to commercial land or buildings in the UK used for a business or property rental business.

What is land remediation & why does that include asbestos removal or remediation?

Land remediation in short is the betterment of land from harmful contaminants. Contamination can result from industrial activity, harmful organisms, or naturally occurring substances such as Japanese knotweed. Under the land remediation relief order this includes any building or structure on that land. This in turn specifically includes asbestos either on or under the land and within structures or buildings on that land. Land or buildings are considered in a contaminated state if contamination is present that could cause relevant harm. Remediation is necessary to address contamination and prevent harm to people or property.

What does 150% tax relief on asbestos mean?

The costs of asbestos removal or remediation can be set against the company’s taxable profits. The 150% tax relief is made up of a 100% deduction of qualifying costs, plus an additional deduction of 50%, providing further tax savings.

For example if £50,000 is spent on removing or making asbestos safe the £75,000 can be knocked off taxable profit. This reduces the corporation tax bill, and in some cases, companies may receive a cash return or tax credit, further enhancing the financial benefit of the relief.

Is there any requirements for a business to make a claim?

To qualify for the relief, certain criteria must be met:

The company must not have been the original polluter of the land or buildings. The asbestos must have been already present when the land and/or buildings were purchased. Contamination must have been present when the property was acquired from an unconnected third party. Only expenditure incurred after the purchase of the land or building is eligible, and it is important to note the timing when the expenditure was incurred, as claims can only be made for qualifying costs within the specified period.
The business must be a UK registered company.
The company must not receive any other form of subsidy or grant towards the asbestos removal or remediation.

Can I claim for more than just the asbestos removal or remediation work?

The costs allowable also include ‘add on’ costs. Some of these costs may also be eligible for capital allowances, depending on the nature of the expenditure. These can be the professional fees, preliminary fees, landfill tax, surveys, project management fees, and anything similarly related to the project. The costs of replacement materials (refurbishment) may also be allowed in certain circumstances. The extent will depend on the nature of the development. These add ons can increase the claim by up to 50% of the actual asbestos removal or remediation works. All costs should be properly documented and written off against the profit and loss account or loss account to maximise tax benefits.

How do I make a claim?

Tax relief is claimed via the tax return. The relief is very generous, but claims must be properly made to ensure they meet HMRC requirements. It is important that you work with asbestos contractors that understand the type and layout of information HMRC will require. As a minimum HMRC will require:

Details of all expenditure including detailed invoices
Full details of labour and material costs
Confirmation that the land or building was acquired in a polluted state
Copies of surveys and environmental reports
Asbestos validation reports and methodology of the removal or remediation

How does the system work in theory?

Based on a commercial property constructed prior to the year 2000. Purchased by an investor who requires refurbishment, including the removal of asbestos.

Cost of asbestos survey £10,000
Asbestos contractor £55,000
Air Monitoring £5,000
Professional Fees £5,000
Preliminaries £5,000
Replacement Materials £70,000
TOTAL REMEDIATION EXPENDITURE £150,000
TAX RELIEF AVAILABLE £225,000 (150,000 x 150%)

By undertaking asbestos removal and contamination remediation, commercial property owners and investors not only benefit from tax relief but can also enhance the property value through environmental improvements.

How does the system work in practice?

The government website contains some information and guidance. The scheme has many variables which must be considered. However, a recent client who owned a building that required land remediation, including removing asbestos, asked for our help to make a claim under the scheme. The total asbestos removal cost was £520,000. Once we had supplied everything that HMRC required our client was able to offset £300,000 against their total project cost. This case study highlights the significant financial benefits of the scheme when properly utilised.

Time limits: Don’t miss your window to claim

If you’re looking at land remediation relief for asbestos removal, timing is everything when it comes to securing this valuable tax break. As a company dealing with asbestos remediation, you’ll need to pay close attention to those strict time limits that HMRC has put in place (and trust us, they don’t mess around with these deadlines).

The bottom line is that you must make a formal claim within two years from the end of the relevant accounting period in which you incurred that capital expenditure on asbestos remediation. Let’s say your company tackled asbestos removal during the accounting period ending March 2022. That means you’ve got until March 2024 to get your claim submitted and secure your deduction.

But what happens if you miss this crucial window? Simply put, you could be looking at losing out on significant tax savings. That’s why it’s absolutely essential that you keep detailed records of all your qualifying expenditure, along with the exact accounting periods when those costs were incurred.

There’s also an opportunity for retrospective claims as well. Companies can look back up to three years to claim land remediation relief on eligible expenditure from previous years (which is pretty handy, if you ask us). This flexibility can be especially beneficial for businesses that may have overlooked the relief initially, or perhaps only recently discovered they were eligible in the first place. The time limit for making retrospective claims for asbestos removal tax relief is up to 3 years.

Want to ensure you don’t miss out on these opportunities? It’s recommended that you work closely with a tax professional who really understands the complexities of land remediation, capital expenditure, and those all-important relevant accounting periods. They can help you navigate the whole process, ensuring your claims meet HMRC requirements while maximising your tax savings. By staying proactive and organised, your company can unlock the full benefits of land remediation relief, improve cash flow, and support ongoing growth, all while meeting your obligations for asbestos removal and remediation.

How do I know if this scheme is relevant to me and what do I do next?

We have helped many clients successfully claim through this scheme. If you would like some advice and want to talk through the next steps for you or one of your clients then feel free to contact Oracle Asbestos Solutions. Oracle Asbestos Solutions also provide a range of asbestos contaminated land services to support your remediation needs.